Building Trust and Equity: The Imperative of Pay Transparency

Welcome to the Built by People podcast, where we share the stories and insights of the world's top HR leaders. Join us as we dive deep into the minds of HR executives, uncovering their strategies, challenges, and triumphs in shaping today's workforce. I'm excited to welcome Sarika Leman, Vice President of People and Culture at Vidyard, to the Built by People podcast. And Sarika, the first question I'd love to ask is Tell me a little bit more about your career journey.

Well, first, thank you for having me. I'm very excited to be here. So my career journey— this is always a fun question. I actually am not a career HRist. I started my career way back when. I won't age myself. You can find it on my LinkedIn, but I worked for a company, Philip Morris, which is a tobacco company. They're now known as Altria on the stock market. And so I actually went in to do retail sales and retail marketing. So you think about like small business owners, wholesale accounts, anywhere that sells tobacco products, they obviously sell Marlboro as their big flagship product. So I worked there for 6 years, an incredible, incredible opportunity coming right out of undergrad. They recruited right out of University of Virginia and it was a great experience because it was such a large company. And so they invested a lot in, in training and development. And I did a lot of sort of traveling and sit behind a desk. So it was like the perfect job for me coming right out of undergrad. They paid for my MBA as a benefit, which, which is awesome. And so once I got my MBA, I worked full-time and then I went to school part-time at, at GW. I decided because I live just outside the DC area that I wanted to do what a lot of people do in this area, and I wanted to go into management consulting, but specifically supporting the federal government. So then I did that for a number of years for a couple different startups, but I was fortunate enough to go— the second startup that I went to work for, I was there for 8 years. We just blessed to grow as quickly as we did. And so I was probably employee 60 or 70, and I went in as a program manager. I managed a single program supporting the government, and then that turned into a portfolio of, of programs across Department of Homeland Security and, and Transportation Security Administration. But because we were growing so fast, the company was having to grow and scale. There was a lot of opportunity to do a lot of different things if you just had the desire. Like, I wanted to learn as much as I possibly could, and I wanted to learn about how to build and scale a business. And so I was like, okay, yeah, I'll do that. Hey, I'll do that. And so I, I got into a lot of things with business process improvement, a lot of building processes across different functions across the business. I eventually found my way and created a role for myself that they approved, which was because I'd worked, I worked so well with clients, I like translated that into, okay, I'm gonna work with our managers and our rising managers and leaders in a role called Director of Client Delivery Excellence. I didn't know then that I realized later a lot of that was about not just working with our customers, but working with our managers and our leaders and the people that were coming up in the organization on enabling them and understanding how best to sell what we do when we sell people doing professional services. So it was a lot of training, a lot of development, a lot of communication, a lot of that type of stuff that I didn't realize until later was kind of my first foray into the world of more talent management and development. And then because we continued to grow and scale, I started to explore the idea of talent management and realized we were too siloed as a business. And at that time, HR was much more transactional function. It wasn't a very proactive strategic function. I don't think that's even really how HR was back then.. And so I, it was an opportunity to build a framework to like break down the silos and bring the people side of the function to the business side and really find that alignment. And so eventually I found my way into, um, building a framework for integrated talent management. And then eventually I led that for the business and found myself, you know, then, uh, then we went through an acquisition and then we started to acquire companies and we were the platform and that was a pillar. Um, and so that was my first, that was where I really stepped into more of the talent function. And then eventually I left there and then found my way into tech, uh, where I got to do sort of all of HR. Um, and that company was about 2,500 people across 7 countries. They had acquired 53 companies in, in 3 years and then was looking to IPO. So then I got to do this from like a private to a public scale, go IPO. That was where I sort of started to do tech and did that across a number of countries, which took me into a whole different echelon of like, wow, how do they do HR and people and culture in different countries? And then eventually I found my way out of there into Vidyard. Vidyard's a Canadian-based tech company, which has been a very interesting journey over the last couple years, and that's where I am now.

I wanna talk about your specialization in compensation, and my first question around that topic is, how do you approach compensation strategy within your organization, and what role does pay transparency in particular play in building trust and engagement with employees?

Yeah, it's such a great question. So, uh, and I love to nerd out on compensation. It's my favorite discipline within people and HR. I think when you think about compensation, you, it has to be rooted in the strategy of the business first. It, this is where HR people function and the business function like really need to be in lockstep with one another. And this is where HR really needs to understand the business and where we're going. And so first it's really about how are we growing? Where are we growing? How do we wanna grow? What do we value? And so that then becomes an input into got to start with the compensation philosophy because that really sets the tone and the foundation for all the programs and policies and processes that you'll build with that sort of core, those core principles in mind. And so always good to start there and align that with where the business is going or where we need it to go and where— what role does compensation or broader-based total rewards play into that? That was where I started when I came into Vidyard a couple of years ago. We didn't have— they didn't have a comp philosophy. And so That's where we did a lot of that work. It also— I will talk about pay transparency in a second, but the other component that people don't understand is job architecture is a very critical component of that. When you think about what you're actually going to execute, how you're going to execute against that strategy. And what I mean by a job architecture is you've got to build, you got to understand, you got to build levels, and that evolves over time. What you might build at a 60-person startup, then, then you're scaling to 200 people and 500 people and then so on and so forth. It evolves over time. And I think, and I get this question a lot, is, well, what, well, we're only 25 people, we don't need that. Like, when is the right time to start building that? No, start it now. Start it from the beginning because I find that it allows you to be much more fiscally responsible in HR when you build those levels because A, you're very clear on these are the roles that we have, these are the levels that we need, here are the career paths that we're gonna be able to build for people so people understand how they're gonna grow their career. And then it give, it sets the right expectations with folks upfront. And then you take that and you align that to, you look at the market, you look at where you are, you look at your comp philosophy, and then you build your comp bands associated with that. And then as you grow and evolve, those things will also grow and evolve. Then what you don't, what you find is you don't end up overpaying, underpaying. You start to like really think about like what, and then your comp philosophy will allow you to anchor that. Like, okay, well right now being a small startup, we're only 15, 20 people. We wanna anchor at 90th percentile of what we're gonna target for paying because being a startup, like, okay, that's where we really can like index, you know, we can't do all this extra other stuff that other companies can do. We don't have deep pockets to invest in learning and development, et cetera, but we could pay more and we could do equity. And then you build your equity program into that, right? But then as you grow to 200, that might change, and then 500, that changes. The job architecture, I think, gives you a really good compass and allows you to be fiscally responsible as you do that. So you're not, because what ends up happening when you don't do it, and I've been, trust me, a lot of companies don't do it. I've been in a lot of companies at different sizes and scales. You'd be surprised. I went into a 2,500-person company that didn't have it, uh, and across 7 countries. And what ends up happening is you then have to build levels and people already have their titles and levels and you have to try to retrofit them. And then, you know, and then you don't wanna degrade their pay. And then how you do that in other countries is completely different because there's a lot of laws and regulations around that. In the US, it's a little bit more flexible. You can, well, I'm gonna change you. You're not actually a senior director, you're actually a senior manager, and here's why. I won't change your pay, but here's what we're gonna do over time. But you can't do that in Canada because if you do that in Canada, it's considered constructive dismissal, and then you end up telling this person you're exiting them, and then you gotta pay severance. You can't do it in Australia, you can't do it in the UK. So it just allows you to be much more conscientious about how you grow and where you grow and fiscally responsible. And also bringing people along, employees along on that journey so they understand how they grow. And you're setting this up, setting them up for success versus setting them up for failure because they're very clear on what's expected of them. And then as they grow, they'll grow with those expectations. You asked about pay transparency. Um, super, super, super important. And I know a lot of companies hide, they hide, they, they're very scared about that. But here's the thing, pay transparency for me will only work If you have those sort of, I think you need to have that comp philosophy. You need to have some of those sort of, um, foundational elements in place. But it's not just about training your managers and your leaders how we do it. You have to bring your employees along. You need to teach them. Education is so critical in the context of pay transparency. For pay transparency to work well and for you to be able to scale it and not scare everybody and feel like, oh my gosh, if I tell people how we do this, They're gonna leave, they're gonna be mad. Well, they would not leave and be mad if you're doing things appropriately and you don't do things shadily and you're trying to hide things, right? So when you think about pay transparency and you bring employees along and you educate them, here's what a job architecture is, here's how we build comp bands, here's how we build your pay, here's what it looks like, your pay at a 50-person startup or a 200-person startup versus a Google or a Facebook. Here's why pay is so fundamentally different. And why we can't pay the same as a Facebook or a, an Amazon, what have you. This is how we pay, but this is how you look at it in the context of it's not just about your base salary. There are other components that lead into sort of your broader compensation, and that's where sort of total rewards come into play. But you get to have a better conversation and you get to educate your employees, and then they get bought in and they're like, oh, okay, that makes a lot more sense. You do the same thing with candidates. Because then you're giving them the option. You're being transparent, like, here's how we pay, here's what we do, here's what we can't do, here's what we can do, here's how we offset that. And you let people make that decision upfront so you're not bringing in the wrong people who are not gonna fit into that culture. And then you don't surprise them and then rip the bandaid off when they come in. They're like, wait a second, that's not what I signed up for. Be transparent upfront and you'll bring the right people into your company with the right culture and the right sort of, um, the right headspace on like, okay, I know what I signed up for and this is what I wanna do and I'm gonna build with this company and this will come. And so that's why I think where pay and transparency is super, super important, it'll allow us to be more equitable and it forces us to be more equitable and make the right decisions. What, even when people aren't looking or employees don't know. But again, I think bringing employees along, they understand it if you give them the information and you'll find they're much more they're much less apt to be angry or feel like you're hiding something from them 'cause you brought them along on the journey to begin with and you trusted them enough to understand how you built it.

What are some of the key benefits and challenges you've encountered in implementing a transparent pay structure, and how do you address any concerns that arise, arising among the employee base?

Yeah, that's a great question. I think change management is always, always, always critical. It is for any people program or policy or anything that you roll out. But particularly I think when you are already an organization that has, you know, had done pay a certain way and it's always been sort of behind the, you know, behind the cloak, behind the curtain, no one really knows. And then all of a sudden you're trying to bring people along on this journey. I think I, I often get a lot of pushback and resistance typically from executive and senior leaders first because they're scared because they're like, oh my gosh, but if we tell them, you know, they're gonna get angry or they're gonna, they're gonna all talk about it and then they're gonna start asking us for more pay and we can't afford that. And I say, Here's the thing, people are already talking about pay. It's a very different generation. There's a lot of different generations in the workforce today. In my time as a geriatric millennial, I can say that about myself. We didn't talk about pay. You never talked about pay. It was like this like taboo thing. That's not the world we live in anymore, nor should we be telling our employees not to talk about pay. We can't tell them that. And so that's probably the biggest resistance I get is typically more from executives who are, where we're trying to make that transition. I think it's also because there are, there's a spectrum, there's a, uh, of pay transparency. You will have companies that are like, everything is public, everybody's pay is public, everybody knows everybody's pay, right? You have those companies. And then, but that, that's not what pay transparency, pay transparency has to be. You have to decide for your own organization where you are, what your internal challenges are, how you're growing, your whole strategy to determine what level of pay transparency is palpable for the organization. And how do you go about doing that in a phased approach? So for my own organization, we didn't have any kind of pay transparency and we wanted to build it. But I will tell you, I am a people leader who's pretty progressive, but I don't believe that pay should— everybody's pay should be public to everyone at all. I personally, I think that's somebody's PII, and I think an individual should have the right to decide if they wanna share their pay or they wanna share what their compensation package is. I can't stop someone from doing it, but they should have that right to decide that. 'Cause that person, 'cause there are people who do not want that for a whole host of reasons, which brings up a whole other conversation regarding around like DE&IB and all of that, right? But so what we decided to do was take a phased approach and decide on a spectrum. What our first phase was, okay, we wanna teach our managers and leaders how we come up with compensation. So let's talk about banding, let's talk about the architecture and level and how does that all connect and how does that connect to performance? So that was our first approach. Start with our managers, start with our leaders. Gotta build the training materials, you gotta build all the, the resources, you gotta sort of bring them along so they can have those conversations. And then the next phase was, okay, once the managers and leaders have a good grasp, we're gonna bring our employees along on that journey and then we're gonna teach them. And here's how we're gonna start by teaching them phase one. But the thing is, we told employees upfront and our managers upfront, here's our phased approach, here's where we wanna get to. We're net— well, we told them where we would never go. We're never gonna be the company that's gonna have everything completely public. That's not who we are and we don't, we're not gonna do that. Here's why, but here's where we wanna get to. Here's how we're gonna get there. And so I, I find when you're very honest about what your approach is and that you're gonna take a phased approach and it's gonna take a certain amount of time and here's who we will be and here's where we won't be, you, you are, you're sort of diffusing, I think, upfront some of those early on, like, well, what about this and why not this? People start to like sort of like, oh. Okay, they're treating us like grownups and they're helping us understand why. And here's what we want to do and here's why we want to do it this way. And I feel like it diffuses a lot of that upfront angst. And then you can really focus on the education versus the like, well, this company does that and this company does that and why don't we do this and why don't we do that? I sort of like dispelled that upfront. Hopefully that answered that question for you.

That's great. Sarika, could you walk us through your process for building job architectures?

Yeah, it's a good question. Depends on the size, um, of the organization, but I think always where it's a great place to start is, of course, always on understanding the strategy of the business, understanding that sort of like 1-year, 2-year, 3, 5-year, like how are we gonna grow over the next couple of years? Where do we think we're gonna grow? Because that'll also infuse to you like how much flexibility do I need to build into the architecture such that I don't have to change it every year because it is a big project. What you end up— what then we look at, okay, what are the subset of jobs that we have? We basically catalog all the current state of jobs, the titles and everything that we have today. And we built— and then you sort of build them in by their functions. And so you can kind of see what the current state looks like. And then knowing what the strategy is, you build what that end state is going to look like for this sort of evolution, this sort of initial phase. And then you got to bring those subject matter experts along, right? So the first thing we might do is we do a bunch of research to understand how much leveling do we really need to build. How you, in a smaller organization, you might only need, you know, 3 IC levels, 2 manager levels, 1 director, and then you're right. You gotta really think about the size and then that grows. Those levels will grow as the company grows. So you gotta build for where you are today and where you might be over the next 3 years. Then what you do is you bring, actually you build a plan on like, okay, you bring these leaders, you gotta bring the subject matter experts in each of the functional areas and say, okay, here's what the current catalog looks like. Here's the research we've done to see where we are today, where we're gonna be. Here's what we're proposing in terms of these are the levels that you'll need because this is where we're going. These are the jobs that we have. These are the titles that we have. Here's how we're gonna group people. But what you also need is like the validation on like, is this the right groupings? Is this the right leveling? You know, you need the validation. HR can't build it alone. You need the subject matter experts that are in the functions. To help you understand what's what and where we're going, because we don't have all that, we don't, we don't have all that, all that knowledge and that functional knowledge. So you gotta bring functional, um, subject matter experts along. It's also great from a change management perspective, 'cause you're bringing stakeholders along and you're socializing what that's gonna look like in the long run. Um, and then that's sort of where you, that's where you build, and that's where competencies will also come from, right? You have your company-level competencies, and then you have your functional-level competencies, and those SMEs will also help you build those functional. I'm oversimplifying, but that's sort of a generic, but sort of like the bird's eye view approach. Now, there's a lot of like, you know, a lot of different layers to that, but that's essentially like big picture how you want to start looking at building the job architecture.

Any parting advice that you'd like to share with our audience related or unrelated to this topic?

Yeah, parting advice, if I were to think about just this particular topic alone, is don't wait to start thinking about, at least just start thinking about a compensation philosophy and really prioritize bringing your employees and your managers along on this journey. Don't, don't hide behind curtains. The more that you can do this transparently and out in the open, the better off you're going to be, and the easier that change and building that culture around transparency is going to be. Because I'll tell you what, it's already happened in the U.S. More and more states are moving to pay, you know, pay transparency laws. The same thing is happening in Canada. The same thing is happening in other countries. So you're better suited, and don't do this whole, or we're only 10 people, or we're only 20 people. Like, do it now. And for HR practitioners, learn how to do this. There's a lot of people out there. There's a lot of resources out there, a lot of people willing to help. I'm one of those people. Reach out to me if you, on LinkedIn. I love this topic. Um, but don't hesitate to, you know, build it out in the open and lean on the HR community because we have such a tremendous community out there. Now than we ever did when I first started my journey in this area. So don't hesitate.

So, Arka, thank you so much for joining us on the Built by People podcast. It was a pleasure having you on.

Yeah, thanks for having me. This is great.